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Thursday, 19 June 2014

Opportunities in Myanmar, but right partners stressed

Myanmar has much higher purchasing power than many people believe, and continues to offered bright opportunities, but Thai investors should carefully pick the right partners to ensure success, pioneer Thai investors and experts told a seminar yesterday.

Kobsak Pootrakool, executive vice president of Bangkok Bank, told the seminar held by the bank that Thai investors should be able to contribute to Myanmar's drive to transform from the agricultural to the industrial age, since Thailand itself experienced such a transformation earlier and knows how to boost farm productivity.

Issares Thumrongthunyawong, the chief representative of Siam Kubota Corp in Myanmar, said that country's government recently started to introduce policies and measures to aid its agricultural sector, including providing loans for rice farmers for equipment and other costs. The government is promoting the use of more machinery in farming to boost productivity, which is still low, and thus has allocated land for big companies to grow rice.

The country is utilising only 18 per cent of its land for agriculture while the farm sector contributes 30 per cent of gross domestic product, meaning there is still a lot of growth potential for this sector, he said.

The No 1 crop there is rice, and it could soon become a competitor of Thailand in export of this commodity. It is the world's second-largest exporter of pulses and beans.

He said Kubota had many competitors there, especially from China. However, Myanmar is much more acceptant of Thai and Japanese goods than Chinese products. "By nature, Myanmar consumers like to use quality goods, though their purchasing power may still not be high," he said. "And they like to use the goods that they see other villagers using. Hence it is a good opportunity for those who can go there to seize the market early."

Issares said a key success factor was to find good local partner, but while Myanmar has many big, rich companies, foreign investors should not be in a hurry and should carefully consider whether these firms would be a good match to their particular types of business.

"Since they [big Myanmar companies] usually operate many businesses, we must consider whether they have time to focus on our products," he said.

Nikom Kanokpaipipat, managing director of NK Fishmeal, said he decided to invest in southern Myanmar eight years ago because of depleting raw materials in Thailand, and was now expanding into the palm-oil business.

While many investors in Myanmar had failed, Nikom said he was fortunate enough to find a good local partner, and was able to reach break-even point.

Kosilpa Patrateeranont, managing director of Advance Stainless Steel, said Myanmar consumers had much more purchasing power than many people had expected. This is because rich people there usually keep a low profile and won't deposit their money in the banks.

Kobsak said Myanmar had a wine cellar that looks very much like the one in The Emporium shopping mall in Bangkok, and could sell many expensive wines at prices of up to Bt60,000 a bottle. He said Bangkok Bank would organise a trip next month to bring Thai investors to meet Myanmar companies in various industries.